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Medicare Funding Cut May Boost Value of Used Imaging Equipment

by Robert Garment, Executive Editor | March 25, 2006
Scheduled DRA funding cuts for
medicare reimbursements could
severely impact thousands
of maging centers
The Deficit Reduction Act of 2005 (DRA), previously covered in DOTmed news, has been signed into law. It's at the top of news again in the medical community with concerns over cuts in Medicare reimbursement for medical imaging. Lobbyists for professional associations are scrambling to restore funding before the law takes effect in 2007.

The new law standardizes fees for imaging, ambulatory surgical centers, and hospitals performing the same procedures. This could mean cuts for imaging centers and ASCs.

"The drastic Medicare reimbursement cuts for out-of-hospital medical imaging procedures in the bill...may force many physicians to stop offering much needed imaging services and limit the number of Medicare patients they receive. These drastic cuts may also force radiologists in rural areas to relocate to hospitals in larger metropolitan areas," cautioned the American College of Radiology. The ACR has met with members of Congress to encourage delaying implementation of the 2007 cuts.

(The imaging provisions in the DRA cap the technical component reimbursement for physician office imaging to the lesser of the Hospital Outpatient Prospective Payment System (HOPPS) or Medicare Physician Fee Schedule payment (MPFS). Congress feels that Medicare should not pay more for a procedure performed out of hospital than they do in-hospital, ACR reported.

"The data from the two payment systems are different and that one methodology cannot be used as a payment mechanism for the other," said Pam Kassing, ACR senior director of economics. Kassing says that the ACR is working to educate lawmakers and government officials that actual cost reporting, and thus payment figures, have traditionally been arrived at differently for hospitals than those regarding in-office or free-standing imaging centers.

In addition, the National Coalition for Quality Diagnostic Imaging Services (NCQDIS) and 30 other medical industry and patient advocate groups sent a letter asking Congress to reconsider the Medicare reimbursement cuts for diagnostic and interventional imaging services in the DRA. The letter was signed by health industry organizations representing more than 75,000 physicians and employing tens of thousands Americans.

A reduction in revenues at imaging facilities will also make it harder to invest in new equipment, according to radiology site Aunt Minnie.com.

But wait a minute, Auntie. If a budget crunch bears down on imaging centers, it may also present an opportunity to contain operating costs by relying on used medical equipment, refurbished to industry and OEM standards. The changes to reimbursement point to the value and effectiveness of incorporating used equipment into clinical capital investments.

DOTmed users including brokers and dealers are probably already talking to customers about the government budget tightening. When selling to potential U.S. customers, the Deficit Reduction Act of 2005 is just another selling point for our industry in 2006.